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The sharp rise in the yuan against the US dollar retraced some of the currency’s excessive depreciation this week, helped by a fall in the US Dollar Index, the 21st Century Business Herald reported, citing analysts.
Key quotes
“Many asset management institutions view the yuan as undervalued against the dollar, which had rallied on expectations the Federal Reserve would continue to hike rates but have now been questioned by weak US economic data.”
“The yuan will continue to fluctuate in a wide range amid changing expectations.”
FX implications
On Wednesday, both the onshore and offshore yuan strengthened over 1,000 points, rescued by the People’s Bank of China (PBOC) after Reuters reported, citing sources, major Chinese state-owned banks sold US dollars in both onshore and offshore markets in late trade on Tuesday.
At the time of writing, USD/CNY is rebounding to near 7.2200, up 0.63% on the day. Downbeat Chinese Industrial Profits data weighed on the domestic currency. The latest data published by the National Bureau of Statistics (NBS) showed that the Industrial Profits fell 2.3% in the first nine months of 2022 from a year earlier after a 2.1% drop in the January-August period.